Chatham Lodging Trust (NYSE:CLDT) shareholders are probably feeling a little disappointed, since its shares fell 9.1% to US$7.35 in the week after its latest third-quarter results. Revenues of US$35m arrived in line with expectations, although statutory losses per share were US$0.38, an impressive 22% smaller than what broker models predicted. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Chatham Lodging Trust's four analysts is for revenues of US$220.2m in 2021, which would reflect a substantial 25% improvement in sales compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 47% to US$0.85. Before this latest report, the consensus had been expecting revenues of US$229.1m and US$0.60 per share in losses. While next year's revenue estimates dropped there was also a loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The average price target was broadly unchanged at US$8.70, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Chatham Lodging Trust, with the most bullish analyst valuing it at US$10.00 and the most bearish at US$7.75 per share. This is a very narrow spread of estimates, implying either that Chatham Lodging Trust is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One thing stands out from these estimates, which is that Chatham Lodging Trust is forecast to grow faster in the future than it has in the past, with revenues expected to grow 25%. If achieved, this would be a much better result than the 0.8% annual decline over the past five years. Compare this against analyst estimates for the wider industry, which suggest that (in aggregate) industry revenues are expected to grow 5.9% next year. So it looks like Chatham Lodging Trust is expected to grow faster than its competitors, at least for a while.
The Bottom Line
The most important thing to take away is that the analysts increased their loss per share estimates for next year. They also downgraded their revenue estimates, although industry data suggests that Chatham Lodging Trust's revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Chatham Lodging Trust going out to 2022, and you can see them free on our platform here..
You still need to take note of risks, for example - Chatham Lodging Trust has 2 warning signs (and 1 which can't be ignored) we think you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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